Thursday, May 29, 2008 8:36:29 PM
re: Yale’s Shiller: U.S. Housing Slump May Exceed Great Depression
Considering other factors, this is not an exaggeration.
http://trend-signals.blogspot.com/2008/05/reality-check.html
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Yale’s Shiller: U.S. Housing Slump May Exceed Great Depression
Yale University economist Robert Shiller, pioneer of Standard & Poor’s/Case-Shiller home-price index, said there’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% since their peak in 2006, he said.
“I think there is a scenario that they could be down substantially more,” Mr. Shiller said during a speech at the New Haven Lawn Club.
Mr. Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct. Home prices rose about 85% from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Mr. Shiller said. “Basically we’re in uncharted territory,” he said. “It seems we have developed a speculative culture about housing that never existed on a national basis before.” Many people became convinced that housing prices would increase 10% annually, a notion Mr. Shiller called crazy.
Mr. Shiller, who said it’s difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, (D., Conn.), and Rep. Barney Frank, (D., Mass.), that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages.
Considering other factors, this is not an exaggeration.
http://trend-signals.blogspot.com/2008/05/reality-check.html
~~~
Yale’s Shiller: U.S. Housing Slump May Exceed Great Depression
Yale University economist Robert Shiller, pioneer of Standard & Poor’s/Case-Shiller home-price index, said there’s a good chance housing prices will fall further than the 30% drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15% since their peak in 2006, he said.
“I think there is a scenario that they could be down substantially more,” Mr. Shiller said during a speech at the New Haven Lawn Club.
Mr. Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct. Home prices rose about 85% from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Mr. Shiller said. “Basically we’re in uncharted territory,” he said. “It seems we have developed a speculative culture about housing that never existed on a national basis before.” Many people became convinced that housing prices would increase 10% annually, a notion Mr. Shiller called crazy.
Mr. Shiller, who said it’s difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, (D., Conn.), and Rep. Barney Frank, (D., Mass.), that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages.
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